27 Apr Women and Money: 11 Tips to Take Control of Your Money
Women and Money: 11 Tips to Take Control of Your Money
Women are generally good at managing their personal finances and day-to-day expenditures. However, most women still find it quite difficult to save up extra funds for that proverbial rainy day. This could be due to several factors that may cause financial strain even to the highest earning woman. In order to attain true financial stability, a woman should be able to manage her finances very well. Below are some pointers that could lead you to gain financial control over your life.
- Be Honest with Yourself
This is the very first step toward controlling your money. It is an established fact that in this day and age, a lot of people spend much more than they make. This can be very easily established by doing a simple evaluation of your income and expenditures within a given period of time, say a month or even a year. This can cause an accumulation of credit card debt and overdrafts that may be too big to pay and due a little too soon. Being honest with yourself is, therefore, a fundamental psychological principle that urges you to admit that you might not make as much money as you would like and, therefore, your income should be budgeted to suit your basest of needs first and the rest after.
2. Getting Rid of Your Past Financial Mistakes
Several psychological factors may be a hindrance to acquiring total control of our finances. These ghosts of our financial pasts may be painful and even heartbreaking, to say the least, and may be in many forms. However, until we tackle these past ghosts, we will forever live in nonexistent financial fears. Past experiences may also have shown us that the future is fickle. Proper financial management does not mean that saving up for a day of need deprives you of a fun life. It means that you get to enjoy your life even more with no worries for whatever the future might hold.
3. Creating a Budget
Once you’ve handled the ghosts of your past, the next step is to budget any money that you make. Budgeting ensures that you can monitor your spending more carefully. A budget does not have to be a complicated affair. It should first contain the fundamental expenses like bills and food and the amounts allocated. It is also advised that you do not spend all of your income. Some of it should be invested in a long-term plan that guarantees returns. Debt payments should also be considered in your budget.
4. Coming up with a Retirement Plan
Setting up a retirement account is a good idea to cater to your finances in your later years. However, this requires understanding the various retirement accounts.
a) Roth IRA account
Roth accounts grow tax-free as long as you don’t withdraw before you are 59.5 years. They do not have tax deductions for each year of contributions, but they can be withdrawn tax-free after 59.5 years.
b) 401(k) plan
These savings grow tax deferred, are taken directly out of your paycheck, and you’re allowed a yearly contribution of $18,500 and catch-up payments after age 50.
c)Simplified Employees’ Pension (SEP)
This plan is best for self-employed people or small business owners. It allows the contribution of up to $53,000 but does not have an option for catch-up contributions.
5. Creating a Will, a Trust, or a Power of Attorney (POA) Agent
A will, like a trust, states your assets and how they will be distributed after your death and can be altered at any time. However, a trust is more flexible than a will in that it doesn’t require court approval. A POA agent manages assets outside the trust such as retirement accounts and life insurance.
6. Getting over Retirement Planning Fear
Retirement is a scary prospect for all of us mainly due to the processes involved, the significant reductions in our paychecks, and the idea that someday we might not have the jobs we now hold and the money that comes with it. However, the more we put off the decision, the less time we have to save up for the future. It would, therefore, do us a great deal of good if we overcame the fear and started looking at the retirement plans available and got started on one.
7. Getting Your Priorities Right
At some point in life, we have to decide whether to get a car, a house, clothes and shoes, or plan for a good future. Needless to say, some assets like a home are good investments, but setting your sights on your post-employment period and saving for it should be a top priority.
8. Your True Wealth
In as much as money is an important aspect of this life, there are other forms of wealth that should be more important. These could be something like internal happiness, job satisfaction, or that smile that your job puts on someone’s face or your own loved one’s face. No amount of money can ever substitute for such feelings.
9. Your Investment Allocations
Liquid cash and monetary savings should not be your only contingency plan past retirement. You should evaluate other non-monetary investments like real estate, shares, bonds, and mutual funds. These assets will continue to earn you some form of income after retirement and can also be liquidated should the need arise.
10. Emergency Savings
You should also have a savings account for emergencies that could arise such as medical and funeral expenses. This should be aside from your regular savings account. This is because any emergency can arise at any particular time, and that way, you can always be prepared.
11. Living above Your Means
The consumerism lifestyle prevalent among many Americans, especially women, and the availability of plastic money has made it very easy for people to spend above their earnings. In as much as we cannot overlook the ease and convenience that comes with credit and debit cards, consistent use of these forms of money can lead you into deep financial debt. A possible solution to this is to use debit cards instead of credit cards and to load them with only the cash budgeted in a specific month. Your spending should also be limited to what you need.
